Professor Stephen Yoder talks with Birmingham Business Journal on the current status of the earlier prediction by industry insiders that new regulations and low interest rates would force community banks into merger and acquisition deals in 2013 and beyond. Yoder tells BBJ that a buyer is going to be a lot more selective today than it was 10 years ago because the financials just don’t look as good for a lot of the banks that might sell due to lower income from fees, loan write-downs and higher compliance costs. “The financial conditions for some banks are so poor that they aren’t worth as much as the buyers thought,” he said.

Yoder said another thing that could stop a deal from closing is a material adverse change that would allow the buyer to walk away.

He said the material adverse change could be anything from a material drop in revenues to regulators demanding the selling bank write down a material amount of assets.

Another risk for the seller, though not as common, is that the buyer might want to replace the entire management team after the deal closes, Yoder said.